Work detail

Current Accounts in Monetary Union: The Role of Euro, Fiscal Policy and Financial System

Author: PhDr. Tomáš Olešňaník
Year: 2015 - summer
Leaders: PhDr. Jaromír Baxa Ph.D.
Work type: Doctoral
Language: English
Pages: 112
Awards and prizes:
Abstract: This thesis examines the implications of euro for current account balances of countries using it. First, we
summarize the main theoretical and empirical findings about determinants of current account deficits
and possible implications of monetary union. Second, an empirical analysis of possible effects of single
currency on current account is presented. We employ time-specific fixed effect estimator, corrected for
possible endogeneity between fiscal policy stance and current account deficits. Our results support
hypothesis of certain impact on current account balances as such. We also document positive effect of
single currency on gross saving and investment rates. Our regression indicates that the role of fiscal
balance and financial sector increased with introduction of single currency therefore implying less
Ricardian behavior of private sector in eurozone. We further examined eventual break in the relationship
between fiscal and current account balances suggesting that eurozone economies tend to become less




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